Businesses are preparing to walk away from Local Enterprise Partnerships and the government needs urgently to increase their powers and funding, the Work Foundation has said.
The think-tank’s warning comes ahead of today’s publication of the Heseltine Review, which examines how public sector bodies can better work with the private sector to promote economic growth.The 39 Local Enterprise Partnerships in England are intended to help councils and local businesses work together to stimulate private sector growth and to co-ordinate business support across an economic area. The Heseltine review, commissioned by Chancellor George Osborne in the Budget in March, is expected to set out the role LEPs can play in helping ‘local communities to support economic regeneration and development’.
However, the Work Foundation says the government’s flagship measure for rebalancing the economy risks being seen as ineffective and losing business support. Drawing on interviews across three LEPs, its Business of cities report found an ‘overwhelming majority’ of business leaders surveyed are ready to reconsider their involvement unless considerably more progress is made. Some gave a deadline of as a little as six months to improve the role and powers of the partnerships, warning that a lack of formal powers is hampering the progress the bodies can make.
The foundation called for this to be addressed by establishing LEPs as legal bodies with real accountability, and giving them a greater role in awarding Regional Growth Fund cash.
The report also highlights concerns that the government’s announcement last month of £4.8m in core funding for the LEPs was not enough for them to be fully effective. At this level of support, they should be able to employ three to four qualified staff, but this is might not be sufficient given the size of the areas involved. The report recommends increasing the core funding available.
Report author Nye Cominetti said: ‘The government has committed itself to involving business in rebalancing the UK economy through LEPs, but business leaders have been frustrated by the lack of progress. There can be no doubt that LEPs face tough challenges – creating private sector jobs during a recession is no easy task. The announcement of core funding is a very welcome move, but if LEPs are to drive growth across the country, they need more power and more funding.
‘Our research also identifies problems with under-representation from small and medium-sized enterprises. This type of company employs the majority of private sector workers in the UK, so it is essential that SME leaders are brought on board with a view to targeting projects at the needs of smaller businesses. These business leaders are also likely to be particularly attuned to the strengths and problems of their areas.’
